FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number 0-20298
SOUTHWEST ROYALTIES INSTITUTIONAL 1990-91 INCOME PROGRAM
Southwest Royalties Institutional Income Fund X-C, L.P.
(Exact name of registrant as specified
in its limited partnership agreement)
Delaware 75-2374449
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
407 N. Big Spring, Suite 300
Midland, Texas 79701
(Address of principal executive offices)
(915) 686-9927
(Registrant's telephone number,
including area code)
Indicate by check mark whether registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days:
Yes X No
The total number of pages contained in this report is 14.
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PART I. - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited condensed financial statements included herein have been
prepared by the Registrant (herein also referred to as the "Partnership") in
accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01
of Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements. In the opinion of management, all adjustments
necessary for a fair presentation have been included and are of a normal
recurring nature. The financial statements should be read in conjunction
with the audited financial statements and the notes thereto for the year
ended December 31, 1996 which are found in the Registrant's Form 10-K Report
for 1996 filed with the Securities and Exchange Commission. The December 31,
1996 balance sheet included herein has been taken from the Registrant's 1996
Form 10-K Report. Operating results for the three and six month periods
ended June 30, 1997 are not necessarily indicative of the results that may be
expected for the full year.
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Southwest Royalties Institutional Income Fund X-C, L.P.
Balance Sheets
June 30, December 31,
1997 1996
--------- ------------
(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 50,966 170,421
Receivable from Managing General Partner 101,617 131,006
--------- ---------
Total current assets 152,583 301,427
--------- ---------
Oil and gas properties - using the
full cost method of accounting 2,244,628 2,244,628
Less accumulated depreciation,
depletion and amortization 1,600,479 1,554,479
--------- ---------
Net oil and gas properties 644,149 690,149
--------- ---------
$ 796,732 991,576
========= =========
Liabilities and Partners' Equity
Current liability - Accounts payable $ 115 -
--------- ---------
Partners' equity:
General partners (16,134) (1,238)
Limited partners 812,751 992,814
--------- ---------
Total partners' equity 796,617 991,576
--------- ---------
$ 796,732 991,576
========= =========
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Southwest Royalties Institutional Income Fund X-C, L.P.
Statements of Operations
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
1997 1996 1997 1996
Revenues
Income from net profits
interests $ 101,923 144,978 230,393 242,851
Interest 1,064 2,791 2,359 3,742
------- ------- ------- -------
102,987 147,769 232,752 246,593
------- ------- ------- -------
Expenses
General and administrative 9,653 9,691 25,211 25,388
Depreciation, depletion and
amortization 22,000 35,620 46,000 68,240
------- ------- ------- -------
31,653 45,311 71,211 93,628
------- ------- ------- -------
Net income $ 71,334 102,458 161,541 152,965
======= ======= ======= =======
Net income allocated to:
Managing General Partner $ 8,400 12,427 18,679 19,908
======= ======= ======= =======
General Partner $ 933 1,381 2,075 2,212
======= ======= ======= =======
Limited Partners $ 62,001 88,650 140,787 130,845
======= ======= ======= =======
Per limited partner unit $ 10.36 14.82 23.53 21.87
======= ======= ======= =======
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Southwest Royalties Institutional Income Fund X-C, L.P.
Statements of Cash Flows
(unaudited)
Six Months Ended
June 30,
1997 1996
Cash flows from operating activities:
Cash received from income from net profits
interests $ 259,782 241,313
Cash paid to suppliers (25,096) (25,388)
Interest received 2,359 3,742
------- -------
Net cash provided by operating activities 237,045 219,667
------- -------
Cash flows provided by investing activities:
Cash received from sale of oil and gas
property interest - 305,594
------- -------
Cash flows used in financing activities:
Distributions to partners (356,500) (259,266)
------- -------
Net increase (decrease) in cash and cash
equivalents (119,455) 265,995
Beginning of period 170,421 29,574
------- -------
End of period $ 50,966 295,569
======= =======
(continued)
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Southwest Royalties Institutional Income Fund X-C, L.P.
Statements of Cash Flows, continued
(unaudited)
Six Months Ended
June 30,
1997 1996
Reconciliation of net income to net
cash provided by operating activities:
Net income $ 161,541 152,965
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, depletion and amortization 46,000 68,240
(Increase) decrease in receivables 29,389 (1,538)
Increase in payables 115 -
------- -------
Net cash provided by operating activities $ 237,045 219,667
======= =======
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General
Southwest Royalties Institutional Income Fund X-C, L.P. was organized as a
Delaware limited partnership on September 20, 1991. The offering of such
limited partnership interests began October 1, 1991 as part of a shelf
offering registered under the name Southwest Royalties Institutional 1990-91
Income Program. Minimum capital requirements for the Partnership were met on
January 28, 1992, with the offering of limited partnership interests
concluding April 30, 1992, with 340 limited partners purchasing 5,983 units
for $2,991,500.
The Partnership was formed to acquire royalty and net profits interests in
producing oil and gas properties, to produce and market crude oil and natural
gas produced from such properties, and to distribute the net proceeds from
operations to the limited and general partners. Net revenues from producing
oil and gas properties will not be reinvested in other revenue producing
assets except to the extent that production facilities and wells are improved
or reworked or where methods are employed to improve or enable more efficient
recovery of oil and gas reserves.
Increases or decreases in Partnership revenues and, therefore, distributions
to partners will depend primarily on changes in the prices received for
production, changes in volumes of production sold, lease operating expenses,
enhanced recovery projects, offset drilling activities pursuant to farmout
arrangements, sales of properties, and the depletion of wells. Since wells
deplete over time, production can generally be expected to decline from year
to year.
Well operating costs and general and administrative costs usually decrease
with production declines; however, these costs may not decrease
proportionately. Net income available for distribution to the partners is
therefore expected to fluctuate in later years based on these factors.
Based on current conditions, management anticipates performing workovers
during 1997 to enhance production. The Partnership could possibly experience
the following changes; a little less than normal decline in 1997, with no
decline in 1998 and thereafter, experience a low decline.
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Results of Operations
A. General Comparison of the Quarters Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the quarters ended June 30, 1997 and 1996:
Three Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 17.95 19.58 (8%)
Average price per mcf of gas $ 2.16 2.09 3%
Oil production in barrels 11,900 12,400 (4%)
Gas production in mcf 19,400 22,800 (15%)
Income from net profits interests $ 101,923 144,978 (30%)
Partnership distributions $ 174,000 145,000 20%
Limited partner distributions $ 156,600 130,500 20%
Per unit distribution to limited
partners $ 26.17 21.81 20%
Number of limited partner units 5,983 5,983
Revenues
The Partnership's income from net profits interests decreased to $101,923
from $144,978 for the quarters ended June 30, 1997 and 1996, respectively, a
decrease of 30%. The principal factors affecting the comparison of the
quarters ended June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
decreased during the quarter ended June 30, 1997 as compared to the
quarter ended June 30, 1996 by 8%, or $1.63 per barrel, resulting in a
decrease of approximately $20,200 in income from net profits interests.
Oil sales represented 84% of total oil and gas sales during the quarters
ended June 30, 1997 and 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 3%, or $.07 per mcf, resulting in an increase
of approximately $1,600 in income from net profits interests.
The net total decrease in income from net profits interests due to the
change in prices received from oil and gas production is approximately
$18,600. The market price for oil and gas has been extremely volatile
over the past decade, and management expects a certain amount of
volatility to continue in the foreseeable future.
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2. Oil production decreased approximately 500 barrels or 4% during the
quarter ended June 30, 1997 as compared to the quarter ended June 30,
1996, resulting in a decrease of approximately $9,000 in income from net
profits interests.
Gas production decreased approximately 3,400 mcf or 15% during the same
period, resulting in a decrease of approximately $7,300 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $16,300.
3. Lease operating costs and production taxes were 6% higher, or
approximately $8,500 more during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 1996.
Costs and Expenses
Total costs and expenses decreased to $31,653 from $45,311 for the quarters
ended June 30, 1997 and 1996, respectively, a decrease of 30%. The decrease
is the result of lower depletion expense and general and administrative
expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased less
than 1% or approximately $40 during the quarter ended June 30, 1997 as
compared to the quarter ended June 30, 1996.
2. Depletion expense decreased to $22,000 for the quarter ended June 30,
1997 from $34,000 for the same period in 1996. This represents a
decrease of 35%. Depletion is calculated using the units of revenue
method of amortization based on a percentage of current period gross
revenues to total future gross oil and gas revenues, as estimated by the
Partnership's independent petroleum consultants. Contributing factors to
the decline in depletion expense between the comparative periods were the
increase in the price of oil and gas used to determine the Partnership's
reserves for January 1, 1997 as compared to 1996 and the decrease in oil
and gas revenues.
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B. General Comparison of the Six Month Periods Ended June 30, 1997 and 1996
The following table provides certain information regarding performance
factors for the six month periods ended June 30, 1997 and 1996:
Six Months
Ended Percentage
June 30, Increase
1997 1996 (Decrease)
---- ---- ----------
Average price per barrel of oil $ 19.56 18.62 5%
Average price per mcf of gas $ 2.35 1.90 24%
Oil production in barrels 22,600 25,500 (11%)
Gas production in mcf 37,800 40,500 (7%)
Income from net profits interests $ 230,393 242,851 (5%)
Partnership distributions $ 356,500 259,266 38%
Limited partner distributions $ 320,850 234,566 37%
Per unit distribution to limited
partners $ 53.63 39.21 37%
Number of limited partner units 5,983 5,983
Revenues
The Partnership's income from net profits interests decreased to $230,393
from $242,851 for the six months ended June 30, 1997 and 1996, respectively,
a decrease of 5%. The principal factors affecting the comparison of the six
months ended June 30, 1997 and 1996 are as follows:
1. The average price for a barrel of oil received by the Partnership
increased during the six months ended June 30, 1997 as compared to the
six months ended June 30, 1996 by 5%, or $.94 per barrel, resulting in an
increase of approximately $24,000 in income from net profits interests.
Oil sales represented 83% of total oil and gas sales during the six
months ended June 30, 1997 as compared to 86% during the six months ended
June 30, 1996.
The average price for an mcf of gas received by the Partnership increased
during the same period by 24%, or $.45 per mcf, resulting in an increase
of approximately $18,200 in income from net profits interests.
The total increase in income from net profits interests due to the change
in prices received from oil and gas production is approximately $42,200.
The market price for oil and gas has been extremely volatile over the
past decade, and management expects a certain amount of volatility to
continue in the foreseeable future.
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2. Oil production decreased approximately 2,900 barrels or 11% during the
six months ended June 30, 1997 as compared to the six months ended June
30, 1996, resulting in a decrease of approximately $56,700 in income from
net profits interests.
Gas production decreased approximately $2,700 mcf or 7% during the same
period, resulting in a decrease of approximately $6,300 in income from
net profits interests.
The total decrease in income from net profits interests due to the change
in production is approximately $63,000.
3. Lease operating costs and production taxes were 3% lower, or
approximately $8,600 less during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996.
Costs and Expenses
Total costs and expenses decreased to $71,211 from $93,628 for the six months
ended June 30, 1997 and 1996, respectively, a decrease of 24%. The decrease
is the result of a decline in general and administrative expense and
depletion expense.
1. General and administrative costs consists of independent accounting and
engineering fees, computer services, postage, and Managing General
Partner personnel costs. General and administrative costs decreased 1%
or approximately $200 during the six months ended June 30, 1997 as
compared to the six months ended June 30, 1996.
2. Depletion expense decreased to $46,000 for the six months ended June 30,
1997 from $65,000 for the same period in 1996. This represents a
decrease of 29%. Depletion is calculated using the units of revenue
method of amortization based on a percentage of current period gross
revenues to total future gross oil and gas revenues, as estimated by the
Partnership's independent petroleum consultants. Contributing factors to
the decline in depletion expense between the comparative periods were the
increase in the price of oil and gas used to determine the Partnership's
reserves for January 1, 1997 as compared to 1996 and the decrease in oil
and gas revenues.
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Liquidity and Capital Resources
The primary source of cash is from operations, the receipt of income from
interests in oil and gas properties. The Partnership knows of no material
change, nor does it anticipate any such change.
Cash flows provided by operating activities were approximately $237,000 in
the six months ended June 30, 1997 as compared to approximately $219,700 in
the six months ended June 30, 1996. The primary source of the 1997 cash flow
from operating activities was profitable operations.
There were no cash flows provided by investing activities in the six months
ended June 30, 1997 as compared to approximately $305,600 in the six months
ended June 30, 1996.
Cash flows used in financing activities were $356,500 in the six months ended
June 30, 1997 as compared to approximately $259,300 in the six months ended
June 30, 1996. The only use in financing activities was the distributions to
partners.
Total distributions during the six months ended June 30, 1997 were $356,500
of which $320,850 was distributed to the limited partners and $35,650 to the
general partners. The per unit distribution to limited partners during the
six months ended June 30, 1997 was $53.63. Total distributions during the
six months ended June 30, 1996 were $259,266 of which $234,566 was
distributed to the limited partners and $24,700 to the general partners. The
per unit distribution to limited partners during the six months ended June
30, 1996 was $39.21.
The source for the 1997 distributions of $356,500 was oil and gas operations
of approximately $237,000, with the balance from available cash on hand at
the beginning of the period. The sources for the 1996 distributions of
$259,266 were oil and gas operations of approximately $219,700 and the sale
of oil and gas properties of approximately $305,600, resulting in excess cash
for contingencies or subsequent distributions.
Since inception of the Partnership, cumulative monthly cash distributions of
$2,254,468 have been made to the partners. As of June 30, 1997, $2,040,878
or $341.11 per limited partner unit has been distributed to the limited
partners, representing a 68% return of the capital contributed.
As of June 30, 1997, the Partnership had approximately $152,500 in working
capital. The Managing General Partner knows of no unusual contractual
commitments and believes the revenues generated from operations are adequate
to meet the needs of the Partnership.
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PART II. - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matter to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial Data Schedule
(b) Reports on Form 8-K:
On June 12, 1997, the Partnership filed Form 8-K and on June 24,
1997, the Partnership filed Form 8-K Amended, with respect to
Item 4, Changes in Registrant's Certifying Accountant.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SOUTHWEST ROYALTIES INSTITUTIONAL
INCOME FUND X-C, L.P.
a Delaware limited partnership
By: Southwest Royalties, Inc.
Managing General Partner
By: /s/ Bill E. Coggin
Bill E. Coggin, Vice President
and Chief Financial Officer
Date: August 15, 1997
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet at June 30, 1997 (Unaudited) and the Statements of Operations
for the Six Months Ended June 30, 1997 (Unaudited) and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 50,966
<SECURITIES> 0
<RECEIVABLES> 101,617
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 152,583
<PP&E> 2,244,628
<DEPRECIATION> 1,600,479
<TOTAL-ASSETS> 796,732
<CURRENT-LIABILITIES> 115
<BONDS> 0
0
0
<COMMON> 0
<OTHER-SE> 796,617
<TOTAL-LIABILITY-AND-EQUITY> 796,732
<SALES> 230,393
<TOTAL-REVENUES> 232,752
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 71,211
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 161,541
<INCOME-TAX> 0
<INCOME-CONTINUING> 161,541
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 161,541
<EPS-PRIMARY> 23.53
<EPS-DILUTED> 23.53
</TABLE>
